FAO/GIEWS - Food Outlook, April 1998

TRADE1/

______________________1/ World trade in wheat and coarse grains is based on and expressed in estimated imports delivered through June 30th of the July/June trade year. Some late-season purchases may be included in the next season if deliveries occur after June 30th. In general, exports and imports are calculated based on estimated shipments and deliveries respectively during the July/June trade season and thus they may not be equal for any given year due to time lags between shipments and deliveries.

This months forecast for global trade in cereals in 1997/98 has been increased by 600 000 tonnes to nearly 202 million tonnes (Table A.2). This revision mainly reflects an upward adjustment to the forecast for rice trade in 1998, which more than offset downward revisions to those for coarse grains and wheat in 1997/98. At the current forecast level, world imports of cereals would be 1.4 million tonnes above the previous years reduced volume due to record rice imports expected in 1998.

The forecast for global wheat imports in 1997/98 (July/June) has been lowered by 200 000 tonnes to 92.5 million tonnes. At this level, imports would be about 1.2 million tonnes below those in 1996/97. Imports by the developed countries are expected to fall by 2.4 million tonnes to 17.3 million tonnes, while, by contrast, aggregate imports by the developing countries are expected to exceed 75 million tonnes, 1.3 million tonnes more than last year and also slightly higher than in 1995/96.

Total wheat imports into Africa are expected to approach a record volume of 21 million tonnes, up 1.4 million tonnes, or 7 percent, from the 1996/97 season. Imports by most countries in northern Africa are forecast to rise this year, mainly because of drought-reduced domestic harvests. Shipments to most other countries in Africa are forecast to remain close to the previous years volumes, or decline somewhat.

The forecast for total wheat imports to Asia in1997/98 is 46 million tonnes, down 1 million tonnes from last year. Most of this years reduction would be on account of reduced imports by China, India and the Islamic Republic of Iran. The Republic of Korea is also expected to reduce its purchases of lower quality wheat used for feed. The reduction in wheat imports into these countries would more than offset increased imports anticipated elsewhere in the region, especially to Pakistan and Syria which were affected by reduced crops in 1997. The Asian financial crisis is expected to have a minimal effect on wheat trade in the region.

Total wheat imports into Europe are expected to reach 5 million tonnes in 1997/98, down 1.6 million tonnes from the previous year. Most of this decline is expected in eastern Europe following a strong upturn in production, while imports by the EC are likely to increase to make up for a shortfall in high quality wheats. Elsewhere, imports into Latin America and the Caribbean are forecast at around 15 million tonnes in 1997/98, up slightly from last year despite an anticipated decline in purchases by Brazil and Mexico, both due to larger crops. For most other countries in the region this years purchases are likely to remain the same or exceed last years levels in order to meet the growth in population.

As regards exports (Table A. 3), due to smaller outputs in several major exporting countries and a possible contraction in world wheat trade in 1997/98, total wheat shipments from the major exporting countries in 1997/98 (July/June) are expected to be smaller than in the previous season. By contrast, because of larger supplies in several smaller exporting countries, primarily in eastern Europe, shipments from these countries are expected to increase this year. In Hungary, the Government announced in early March that it would subsidize the export of 500 000 tonnes of wheat through the end of the current marketing season in June as a means of reducing its large wheat surplus, mainly of low quality wheat suitable for animal feed purposes.

OVERVIEW OF WORLD CEREAL IMPORTS

Wheat

Coarse grains

Rice (milled)

Total

1996/97

1997/98

1996/97

1997/98

1997

1998

1996/97

1997/98

( . . . . . . . . . . . . . million tonnes . . . . . . . . . . . )

Asia

47.2

46.1

56.0

54.4

9.1

12.4

112.2

112.9

Africa

19.4

20.8

8.8

10.3

3.9

3.8

32.1

34.9

Central America

4.1

4.7

8.3

8.6

1.4

1.3

13.8

14.5

South America

10.7

10.5

4.8

6.3

1.8

1.9

17.3

18.7

North America

2.6

2.5

3.4

4.0

0.5

0.6

6.6

7.1

Europe

6.5

4.9

6.7

3.7

1.0

1.0

14.2

9.6

CIS

2.6

2.5

0.3

0.2

0.4

0.3

3.4

3.1

Oceania

0.5

0.4

0.1

0.1

0.3

0.3

0.9

0.9

WORLD

93.7

92.5

88.4

87.7

18.4

21.6

200.4

201.8

Developing countries

73.9

75.2

55.8

57.5

15.2

18.5

144.9

151.2

Developed countries

19.7

17.3

32.5

30.2

3.2

3.1

55.5

50.6

SOURCE: FAO

The forecast for world coarse grain imports in 1997/98 (July/June) has been lowered by 1 million tonnes from the previous report to 87.7 million tonnes, which would be similar to last years already reduced volume. While aggregate imports by the developing countries in 1997/98 are anticipated to increase by almost 2 million tonnes to 57.5 million tonnes, total imports by the developed countries are forecast to fall for the sixth consecutive year to 30.2 million tonnes, down 2.3 million tonnes from the previous year. As regards individual coarse grains, global imports of maize are forecast to reach 63 million tonnes, up 1 million tonnes from the previous year while imports of barley are anticipated to amount to 14.5 million tonnes, almost 1 million tonnes below the previous years level. This seasons imports of sorghum, millet and oats will probably remain unchanged, while imports of rye are expected to decrease slightly mainly due to an expected reduction in purchases by the Republic of Korea.

Total coarse grain imports into Africa in 1997/98 are now forecast at 10.3 million tonnes, up 1.5 million tonnes from the estimated imports in 1996/97. This reflects mainly larger maize imports by several sub-Saharan countries, including Malawi, Tanzania and Zambia, due to their sharply reduced domestic output. By contrast, in North Africa, improved production in 1997 is expected to lead to reduced maize purchases by Egypt. In Algeria, imports of barley are expected to rise following reduced domestic production.

The forecast for total coarse grains imports into Asia in 1997/98 has been cut further this month to 54.4 million tonnes. This would be 1.6 million tonnes less than the previous year and almost 1 million tonnes down from the February forecast which had already been lowered in response to the financial crisis confronting several countries in Asia. The decline in this months forecast mainly reflects downward adjustments to barley imports by Saudi Arabia and maize imports by the Chinese Province of Taiwan.

In Europe, aggregate coarse grain imports in 1997/98 are currently forecast at just under 4 million tonnes, almost 50 percent below last years volumes. In the EC, maize imports are expected to fall to 1.6 million tonnes, down 800 000 tonnes from the previous year, due to large domestic availabilities of lower quality wheat that can be substituted for maize in animal feed. In addition, this years maize and barley purchases by the Czech Republic, Bulgaria and Poland are also forecast to decline sharply mainly due to larger domestic crops. Imports by the CIS are forecast at 200 000 tonnes, slightly down from last year, and representing an insignificant volume compared to the early 1990s.

Imports into Latin America and the Caribbean are forecast at about 15 million tonnes, up 500 000 tonnes from the previous report and almost 2 million tonnes more than in the previous year. Larger purchases anticipated by Brazil would account for most of this years rise in imports as well as this months upward revision. Maize purchases by Brazil are forecast to more than double, mainly due to strong domestic and export demand for poultry meat and despite a bumper crop. Elsewhere, imports are also forecast to increase in Peru and Venezuela, while imports into Mexico are expected to decline by 1 million tonnes from the previous year mostly because of reduced need for sorghum as a result of higher production.

Regarding exports, total shipments in 1997/98 (July/June) by the five major coarse grain exporting countries are likely to fall below the previous seasons levels. Lower global import demand combined with larger export availabilities in a number of smaller exporting countries are mainly responsible for the expected reduction in shipments by the major exporters. The most significant contraction is likely in the United States, mainly on account of reduced maize sales, while lower exports of barley from the EC could also result in a substantial decline in exports from the Community. Among the smaller coarse grain exporters, South Africas coarse grain shipments are likely to be curbed because of reduced maize output, but Hungary and Romania are likely to boost their sales due to much larger domestic maize crops. In addition, maize exports by China are forecast to be double last years volume. This years unexpected rise in barley shipments from the CIS, primarily the Russian Federation and Ukraine, would place the CIS as the worlds seventh largest coarse grain exporter this season.

The forecast for world rice trade in 1998 has been increased by 1.7 million tonnes from the previous report to a record 21.6 million tonnes, 3.2 million tonnes up from 1996 and 600 000 tonnes above the previous record achieved in 1995. The upward revision this month is mostly due to increased import demand expected in some major importing countries along the equatorial belt and in the southern hemisphere where, after planting delays, recent unfavourable growing conditions could further reduce yields of their 1998 main-season crops. These developments, together with the production shortfalls already experienced in 1997, are likely to result in a considerably larger imports in 1998.

Indonesia has been particularly affected by unfavourable weather conditions and the forecast for its imports in 1998 has been raised by about 1.6 million tonnes from previous expectations, to some 3.5 million tonnes. A prolonged drought, to some extent associated with the El Niño weather phenomenon, reportedly affected over 400 000 hectares of paddy fields leading to a shortfall in the 1997 production and a corresponding increase in import requirements for 1998. Rice imports for the first two months of 1998 alone are estimated at some 900 000 tonnes, surpassing the estimate for the whole of 1997, and imports for March are estimated at 500 000 tonnes. Domestic prices of rices have risen sharply in recent weeks. However, the Government is, reportedly, planning to increase rice supplies to the domestic market at subsidized prices starting in April, most of which are expected to be imported.

Elesewhere in Asia, the forecast for imports by Bangladesh in 1998 has been increased by 400 000 tonnes from the previous report to 500 000 tonnes. Recent reports indicated that output from the Aman crop was reduced by bad weather and supplies are tight. In an effort to increase domestic availability of rice, the Government has exempted rice imports from the 2.5 percent import tax. In contrast, while imports by China (Mainland) for 1998 are expected to rise marginally from their 1997 level, the forecast was reduced by half from earlier expectations to 400 000 tonnes. Purchases by the Philippines are anticipated at about 1 million tonnes, unchanged from the previous report but about 10 percent higher than in 1997. In Brazil, the major rice importer in Latin America, 1998 rice imports are now anticipated to reach 1.2 million tonnes, 100 000 tonnes more than forecasts in the previous report.

On the export side, anticipated shipments by Thailand, the leading rice exporter, were increased by 300 000 tonnes from the previous forecast to 5.6 million tonnes based on expectations of higher import demand, especially from Asian countries. Shipments out of Thailand for the first two months of the year totaled over 1.2 million tonnes, significantly up from about 700 000 tonnes during the same time in 1997. In Viet Nam, it is estimated that existing commitments for export supplies up to May 1998 total about 2.5 million tonnes, almost double the amount that was shipped during the first five months of 1997. The fast pace of exports has prompted the Government to impose a temporary freeze on new export sales. Viet Nam is forecast to ship a record 4 million tonnes in 1998 in response to strong global import demand. Exports from India are, generally, less price competitive than those from Viet Nam and Pakistan. However, given the good 1997 rice season and favourable world price, Indias exports are forecast at 2 million tonnes, up by 300 000 tonnes from the previous report but 2.2 million tonnes less than the 1995 record. Following a record production in 1997, exports by Pakistan, which like India sells both the premium priced basmati and lower quality rice, were also raised by 300 000 tonnes to a record 2 million tonnes. Shipments out of China (Mainland) were revised upward by 700,000 tonnes to 1.7 million tonnes, the highest in four years, primarily due to its record 1997 paddy output.